The IMAX Conundrum

When I interviewed IMAX CEO Rich Gelfond (then co-chairman and co-CEO) for Knowledge@Wharton two years ago, it seemed like the best of times and the worst of times for the company. While IMAX had done record box office with the just-released Harry Potter and the Order of the Phoenix, the company’s stock price was languishing and it was in the process of restating its financial filings and responding to an inquiry from the SEC.

Much has transpired in the intervening two years. Many of the plans that Gelfond outlined to Knowledge@Wharton have since been realized, including the roll out of the company’s digital projection system and expansion of the number of IMAX theaters, including retrofitting existing theaters to offer an IMAX-branded experience.

The current (June 2009) issue of Fast Company named Gelfond one of the “100 most creative people in business,” praising the company’s recent moves (and including, in the online version of the profile on Gelfond, a quote from my Knowledge@Wharton interview). Fast Company concludes that IMAX is “poised to claim more market share.”

The recent box office numbers support the optimism about the company’s future. Gelfond recently stated that IMAX was responsible for 15% of the total domestic box office for Star Trek on only 138 screens.

But there are a dark clouds forming on the horizon. Some observers have questioned whether IMAX’s expansion has come at the cost of diluting the company’s brand and sowing consumer confusion.

Back in October, 2008, LF Examiner, which calls itself “the independent journal of the large format motion picture industry” published a piece titled “Is IMAX the next ‘New Coke’?” questioning whether it was appropriate to apply the venerable IMAX brand to the newer, retrofitted theaters.

The main point of contention is the size of the screen. The original IMAX system, known as “15/70,” used a large 70mm by 46.5mm film frame with 15 perforations horizontally. The image was projected onto a huge 76 by 97 foot screen. The retrofitted theaters are considerably smaller. The size may vary somewhat by venue, but LF Examiner states that the screen in New York City’s AMC Empire 25 IMAX digital theater is 28 x 58 feet — still large by multiplex standards, but much smaller than the traditional IMAX screen.

The LF Examiner piece also raises questions about IMAX’s digital projection system, claiming that while the dual 2K Christie projectors have “good contrast and slightly better resolution than other digital projectors” they display a visible “screen door effect” created by the projector’s grid of pixels.

The issue of the two different IMAX systems gained renew traction on May 12 when actor and comedian Aziz Ansari published a profanity-laced blog post decrying his less than satisfactory experience seeing Star Trek in a digital IMAX theater.

Ansari begins by declaring: “WARNING: AMC theaters are running FAKE IMAX’s and charging $5 extra for a slightly bigger screen. Boycott IMAX, AMC, and Regal. Don’t let them fool you.” He ratchets up the invective in the remainder of the post.

Gelfond responded to some of Ansari’s charges in a MainStreet.com article by explaining that the “IMAX experience” is about more than just screen size. Ansari, for his part, remains unconvinced.

The core controversy isn’t whether IMAX should make the move to digital projection or be allowed to retrofit existing theaters. The issue is whether the company should use the same brand identity for both systems.

According to the LF Examiner, IMAX VP Larry O’Reilly stated that IMAX’s two major digital partners, AMC Entertainment and Regal Entertainment Group, originally wanted to call the new screens “IMAX Digital” to differentiate them from the traditional IMAX experience. But, for reasons of their own, the company continues to market both systems under the same name and doesn’t provide information on which theaters are equipped with which technology.

Because of IMAX’s refusal to differentiate the theaters with the smaller screens from those using the larger IMAX format, movie fans have collected their own field reports and published them using Google maps on a site titled “IMAX or LIEMAX?“.

This groundswell of consumer backlash shows no signs of abating. Gelfond and company need to address this issue head on. IMAX is a company with a distinguished history and a strong brand. The company owes it to its customers and shareholders to communicate its product offerings clearly.

Update: May 23, 2009

As anticipated, the controversy about the varying sizes of IMAX screens shows no signs of subsiding. A number of major publications have added to the debate since this post was originally published.

Variety’s David Cohen reviews the situation in an article titled “Imax Responds to Screen Size Critics.” The piece contains a few quotes from IMAX CEO Rich Gelfond which, sadly, add little to the conversation. Gelfond states that “We are going to do something” about the complaints but, as Cohen puts it, “he isn’t sure what.”

Wired published a more in-depth Q&A with Gelfond which asks the pointed question: “What exactly does IMAX mean?”

Gelfond responds:

IMAX means the most immersive film experience on the planet. 3-D is going to be more obvious to you in IMAX. And in 2-D, IMAX means a special sound system. It means special treatment of the film so that when Star Trek is shown in an IMAX theater, it goes through a digital process where we up-res the movie so there’s more brightness and more contrast.

And with the screen part of it: In all of these multiplexes, IMAX is the biggest screen. But it’s not only screen size. There’s something called “perceived screen size,” which involves the relationship of the viewer to the screen. If you’re in the first row, that screen is going to look a hell of a lot bigger to you than if you’re in the 30th row. We typically take out the first four rows of seats in a theater and move the screen forward so it’s a lot farther forward in an IMAX theater. Also, the screen goes floor to ceiling, wall to wall. By bringing a floor-to-ceiling, wall-to-wall screen forward toward the audience, the viewer has the perception that the screen is larger than just the physical size.

Sco tt Mendelson, writing in the Huffington Post, sees the debate as “ridiculous” and echoes Gelfond’s sentiments that “IMAX is not just about screen size” but, rather, is about “picture quality, sound quality, and the theoretical ability to completely immerse yourself in the film.”

Mendelson has little sympathy for the plight of actor and blogger Aziz Ansari who complained bitterly about paying for an IMAX version of Star Trek and then being disappointed by the size of the screen. Mendelson asks “[Why] the heck didn’t [Ansari] just drive about five minutes…to the Universal City Walk theater with a truly giant ‘traditional’ IMAX screen?”

While I find Ansari’s profane, over-the-top response disproportionate to the offense he suffered, Mendelson misses the point. His question assumes that the viewer knows in advance the size of the screen and — to the extent the consumer cares — can make an informed choice. But neither IMAX nor the theaters provide this information, labeling all venues “the IMAX experience” regardless of screen size and projection technology (15/70 film versus digital).

There is something magical about the immersive cinematic experience provided by a large screen, a crisp image, and high-quality sound. I’m pleased that IMAX is working to bring that experience to a wider audience. But the company needs to be more transparent about the projection details in the various IMAX-branded venues.

The image of the IMAX logo is a copyrighted image, the copyright for which is most likely owned by IMAX Corp. It is believed that the use of a web-resolution image for identification and critical commentary qualifies as fair use under United States copyright law. “The IMAX Experience” is a registered trademark of IMAX Corp. The opening image was based in part on an image originally published by LF Examiner. It is believed that its modification and use for critical commentary qualifies as fair use under United States copyright law.

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8 thoughts on “The IMAX Conundrum”

I’ve noticed a wide variance, as you point out, in what claims to be IMAX. I hope they clarify this in a better fashion in the future. That said, I think the future of the company is bright for a few reasons.

The ability to have a home theater is now affordable, which makes the public want to go the movie theater less. Additionally, for the first time ever, people polled were more likely to have played a console video game in the past six months than having gone to see a movie, as reported on Slashdot yesterday. When people do want to have the movie going experience, they want it to be larger than life: with as spoiled as we can be with our home BluRay and HDTV, a great IMAX experience still blows the senses away. A regular movie screen simply doesn’t deliver the impact that it once did.

Tough economic times are usually good for entertainment like movies; think about the industry during the Great Depression. People need to get away from their worries, even if just for a little while. I use the same argument and example on why virtual worlds continue to rise in popularity, even in these tough economic times.

These various factors lead me to believe that IMAX has a bright future, and hopefully that isn’t just the technophile in me coming out!

Tim:
I agree with all your points and, in particular, your observation about the impact of home theater on IMAX. While the increasing quality of in-home cinema may threaten the small-screen multiplex operators, it provides an opportunity for companies like IMAX to differentiate themselves from other theatrical exhibitors.
Back in 2007 I wrote about this in terms of what I call the “law of the excluded middle.” As I put it then:

When products or services become commoditized, it’s the broad, mid-market that disappears. But there’s a corollary to this observation: As everyone runs to the low end of the market to expand share in an attempt to retain profits as margins shrink, you can often stake out a profitable niche by doing the exact opposite — moving to the high-end of the market.

In that post, I used IMAX as an example:

When the multiplex began to dominate theatrical movie exhibition, it seemed to signal the end of large screen movie houses. Indeed, the economics of the multiplex were impossible to deny: more screens offered more consumer choice, the option to allocate screens based on a film’s popularity maximized capacity, the ability to show a single print on multiple screens by staggering the start times trimmed costs and gave the audience more viewing options. But as the drive toward smaller screens advanced, IMAX was able to differentiate itself by doing the exact opposite: enhancing the theatrical experience with a larger screens and better sound.

So, like you, I think their future looks promising — if they address the current issues. They could face difficulties if the IMAX name means different things in different venues. Their brand is one of their most important assets. I hope they manage it well.

This was interesting to read. My impression of seeing Star Trek on a ‘fake’ IMAX was that while it was a somewhat bigger screen, it was in a proportionally larger theater with proportionally more people, so ended up no more immersive than a typical theater experience. Maybe I would have felt different if I had a better seat. But I can’t say I’d go out of my way for that particular IMAX experience again.

IMAX should ALWAYS display somewhere what format each movie was originally intended for (IMAX, IMAX DOME or 3D).

A few years ago at the Museum of Civilization, near Ottawa (Canada) I noticed that many scenes of the movie looked inexplicably distorted on the flat IMAX screen, until the end credits revealed it was shot for the OMNIMAX (Dome) theaters. I felt betrayed.

More recently, at the Ontario Science Centre, the film credited the stereographer involved and had the IMAX 3D logo clearly displayed at the end. I had been duped to watch it in 2D ! – If I had known it was originally produced in 3D, I would have found a theater to see it in 3D. I truly love 3D (well, most of it). There was nothing on the poster or the marquee mentioning it was originally produced in 3D.

Buyers beware ! Even wrote to head office with my suggestions… nothing has changed yet. Now very disappointed in IMAX.